China vows ‘fight to the end’ after Trump threatens extra 50% tariff
Beijing and Washington swap warnings of additional trade retaliation as markets rebound in Asia
China has vowed to “fight to the end” if the US goes ahead with threatened tariff increases, intensifying fears that the world’s two most important economies are set for a hard decoupling.
The commerce ministry on Tuesday said it would further retaliate if US President Donald Trump makes good on his threat to levy an additional 50 per cent tariff on Chinese goods.
“If the US proceeds with implementing these escalated tariff measures, China will resolutely take countermeasures to safeguard its own rights and interests,” a commerce ministry spokesperson said on Tuesday. “If the US insists on going its own way, China will fight to the end.”
Trump’s tariff plans have roiled global markets in recent days.
The S&P 500 index has shed more than $5tn since Trump shocked US trading partners with universal tariffs and “reciprocal” levies, triggering warnings of faster inflation and slower economic growth — or outright recession. The index closed down 0.2 per cent overnight after wild swings and Asian markets have regained ground in early trading.
Beijing has said it will impose tariffs of 34 per cent on US imports after US levies on Chinese goods come into effect. Trump on Monday threatened to introduce an additional 50 per cent tariff on Chinese goods, a move that would bring US duties on Chinese imports to more than 120 per cent by some estimates.
“The US threat to further escalate tariffs is a mistake compounded by another mistake and once again exposes the coercive nature of the US side,” said the ministry spokesperson. “China will never accept this.”
Beijing backed up the threat of retaliation by fixing the exchange rate of its currency, the renminbi, at Rmb7.20 per dollar — the lowest since September 2023 — in a sign it could use depreciation to offset Trump’s tariffs.
During the first Trump administration, Beijing let its currency decline to offset the impact of tariffs. On Tuesday morning the offshore renminbi, which trades freely, weakened past the threshold of Rmb7.35 per dollar for the first time since February.
“I don’t think Beijing’s going to back down,” said Lynn Song, ING chief economist for greater China. “It might be [a case of] who blinks first.”
Song added: “It feels more like a test of endurance at this point — basically who feels the pain first and who has to come to the table with a slightly weaker bargaining position.”
Chinese markets rose on Tuesday after sustaining big falls on Monday. Hong Kong’s Hang Seng index jumped 3 per cent, led higher by the Chinese companies listed in the territory, while the mainland’s CSI 300 rose 0.3 per cent.
China’s financial regulators and state fund managers weighed in on Tuesday with vows to support the country’s stock market. Several Chinese companies also announced share buybacks.
Chinese experts said that while the world’s second-largest economy stood to suffer from Trump’s trade turmoil, Beijing would hold fast to its stance rather than concede to Washington.
“There is no possibility that Beijing would submit to Trump’s intimidation,” said Gao Jian, a Shanghai-based foreign policy expert with the Center for International Security and Strategy at Tsinghua University.
Shi Yinhong, a government adviser and professor at Renmin University, said that while US-China trade stood to be “mostly destroyed”, Beijing’s hardline approach was unlikely to change.
“China stands out as the only country in the world that has taken a uniquely tough and uncompromising position in response to Trump’s tariff war,” Shi added, predicting that a new global trade paradigm would be “extremely disadvantageous for China”.
ONLINE